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Watch Out For This Legal Clause In Healthcare Forms

Kevin Whipple

Filling out paperwork is part of the drill whenever you see a new doctor. If you’ve ever skimmed the fine print to get to the end, you’re not alone. But the rise of binding arbitration in healthcare is reason enough to review every document you’re given.  

By signing a binding arbitration clause, you essentially waive your right to choose to go to court if something goes wrong. Encountering one of these clauses isn’t necessarily a reason not to use a doctor who otherwise meets your needs. But it’s worth understanding what binding arbitration means for you, and what to look for, and ask, before putting pen to paper.

The rise of binding arbitration in healthcare

You can find binding arbitration clauses in varied types of contracts, including for employment, credit cards and cell phone plans.

“This is a contractual agreement by which two parties, maybe more, agree to waive the opportunity to go to court and appear before a judge and jury. Instead, you resolve any dispute by a private arbitrator,” explains Ramona L. Lampley, associate dean of academic affairs and professor of law at St. Mary’s University School of Law. Many times, binding arbitration also prohibits multiple people from combining claims into a single lawsuit, adds Judith Resnik, the Arthur Liman Professor of Law at Yale Law School. 

It’s not clear how many providers make patients sign binding arbitration clauses, but experts say they’re increasingly common. One likely factor is the growing number of healthcare practices owned by liability insurance providers or health systems. Binding arbitration is thought to be a way to lower providers’ legal fees and reduce payouts to patients who sue for malpractice. (Although some legal experts argue that arbitration doesn’t actually save providers money.)

These contracts appear to be more popular in certain specialties, such as ob-gyn, Lampley says, because malpractice suits involving mother and child can provoke strong emotional responses from juries. Arbitration offers a way around that. 

What binding arbitration means for patients

While the people or companies who own medical practices may benefit from binding arbitration, that’s not necessarily the case for patients. When you use arbitration to resolve a dispute, you go before one or a panel of arbitrators instead of a judge and jury. Arbitrators might be lawyers or former judges, and they’re supposed to be impartial. Most contracts designate an arbitrator. 

First, “look to see if a reputable, unbiased service [such as JAMS] is designated,” Lampley says. She advises patients to research the company: Look to see if it’s national and has a robust set of arbitrators. Also, read any published case procedures, statement of rights and online reviews you come across. 

If the designated arbitration service doesn’t seem reputable, carefully consider whether or not to sign your name. The same advice applies if the clause either doesn’t specify who chooses the arbitrator or says something like, “The arbitrator will be unilaterally selected by the drafter of the agreement.”

“If the arbitrator is a person to whom the provider regularly sends business, one might argue the arbitrator has an unconscious incentive, or bias, to rule in that party’s favor, in order to keep getting the business,” Lampley says. If you suspect bias, you can ask the provider to explain who the designated arbitrator is and what sort of relationship they have. 

Arbitration tends to be quicker than a trial. But that’s partly because it involves a more limited discovery process, meaning the period when a plaintiff and defendant share information that’s relevant to the case. Sometimes, an arbitration clause spells out the discovery rules; other times the designated arbitrator posts the rules on their website. Yet in other instances, discovery rules aren’t established until a case begins. These variations are another reason to read paperwork closely.

As for the cost to patients, arbitration is often, but not always, cheaper than going to court. “In a high-damage medical malpractice case, you can find an attorney who will represent you on a contingency fee, usually 25 to 30 percent of your total recovery,” Lampley says. “So there’s no out-of-pocket at the outset, and if you lose, there’s no payment, generally.” Plus, arbitration payouts tend to be lower. On the other hand, for low-value claims that aren’t worth the cost of suing in court, arbitration can provide a useful alternative pathway to recovering damages, says Lampley, adding that you often don’t need a lawyer to arbitrate a claim that’s only a couple thousand dollars.

Lastly, many companies prefer arbitration because it shields them from public scrutiny. While some patients also see this relative privacy as a plus, others want their day in court. “There is power in having a case heard by a jury,” says Lampley. “It’s a cathartic experience.” Also know that, with arbitration, you have a limited right to appeal, if you have any right.”

To sign or not to sign? Making an informed decision

Binding arbitration clauses aren’t necessarily something to fear or avoid at all costs. It depends on your situation. If you’re having an emergency, or seeing an in-demand specialist, signing the form might be your best, or only, option. If you can easily find another provider, that calculus might shift.

You can try to negotiate the terms of a binding arbitration clause, but you might not be able to, especially if a doctor’s practice is owned by a larger company that mandates its use, Lampley adds. Often, your only two choices will be signing the clause and seeking treatment elsewhere.

Some say these contracts infringe on patients’ rights. “If a healthcare provider violates state or federal law, such as [by committing] medical malpractice, I have a ‘right’ to bring a lawsuit,” Resnik says. “With this piece of paper, though, they say I’m consenting to waive my right to go to court, but there’s no consent. I cannot get service unless I sign this.” 

It’s even worse for people with few provider options due to restricted insurance, mobility or transportation. For many patients, “there really may not be another provider available to them,” says Caitlin Donovan, senior director of public relations for the National Patient Advocate Foundation and the Patient Advocate Foundation

She’s also concerned about the impact of binding arbitration on the “sacrosanct” patient-provider relationship. “Not only are doctors authority figures, but we also trust them with our lives,” she says. “Patients should be able to trust that their doctor is advising them with only their health in mind and not with the provider’s best financial interest.”

Still, Lampley says that binding arbitration contracts shouldn’t dissuade patients from seeing a great doctor. “Usually when you go to the doctor, you have a health issue and want it resolved. Rarely does that result in a problem you want to sue about. And an arbitration agreement isn’t taking the right to sue away, it’s just saying you can’t do it in public court.” That’s important to understand, because research shows that binding arbitration clauses often lead the people who sign them to believe they can’t seek any legal action.


The TL;DR

Here’s what Lampley says to do if you come across a binding arbitration clause before your appointment:

  • Read it carefully, checking to see if a designated arbitrator is listed and if that person or service is reputable.
  • Check that there’s no provision taking away or limiting damages, requiring distant travel or putting the fees entirely on you.
  • If you’re OK with all the terms, go ahead and see the doctor as planned. “If the worst happens and you get injured and feel the doctor is responsible, there have been cases — though not a lot — where courts have struck these [clauses] down,” Lampley adds. “Always the advice of a reputable attorney on the enforceability of the arbitration clause and the merits of your case.”

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